I get a lot of questions from members about down payments and how much they will need. Typically, 20% of the purchase price is the recommended standard, but there are circumstances where that might not be possible or it may be in a homebuyer’s best interest to put down less than 20%. In today’s post, I’d like to discuss an option for people that wish to put down a smaller down payment.
There is a new mortgage product called “CU Promise 90” that is being offered by select credit unions in Maine, such as Ocean Communities. With CU Promise 90, you do not need Private Mortgage Insurance (PMI) as long as your down payment is 10% of the sale price. Normally PMI is needed if you financing more than 80%, but now you can keep your hard earned money in your savings account with your favorite Credit Union!
The CU Promise 90 program is designed so that you can put less money down and still have the lowest monthly payment available. If coming up with a 10% down payment might still be difficult, the CU Promise 90 Program also allows for gift funds to be used as your down payment.
Great post. It's nice to know there are options if you don't have 20% down but coming up with 10% is kind of a challenge too. Are there other options?
ReplyDeleteThere are several options available to borrowers who ahve a down payment less then 10%. There are two options which allow for up to 100% financing and has no PMI requirements, and those options are Va Loans for Veterans, and USDA/RD Loans (financing for low to moderate income levels and for qualified properties). FHA and our CU Promise 97 Program offer a small down payment requirement with a low monthly PMI Premium. Please keep in mind that each of the options mentioned have pros and cons, and I strongly recommend an application interview to assist with identifying which option suits your needs.
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